Community discussion: pBTC-on-BSC Compensation plan, Proposal 1

The outstanding issue with the current draft v0.6 is this assumption:

pBTC-on-BSC is no longer linked to the value of BTC. Instead, it is now a “claim” token that can be
redeemed for a USD countervalue as defined in the compensation plan. At completion of the
compensation plan, the token will no longer be useful. In parallel, a pBTCv2-on-BSC bridge with a 1:1 peg
will be released for future usage

It is not up to you or a dao to unilaterally redefine the pBTC token to mean something completely different from its original intent. For anybody who cares to read, I have already explained in my previous comments why we believe the pBTC token to have the force of a legal contract, and any changes would require consent not only from the issuing PNETWORK but also the creditor counterparty. I have also proposed one simple way to obtain such consent - there may be other ways, but this proposal does not address the issue of creditor consent in any way.

Creditors are not stakeholders, in fact it is bewildering anybody would entertain the idea of them ever becoming after this experience, and the dao vote is not a substitute for obtaining creditor consent.

In fact, from my point of view, this proposal is simply a way to transfer value from creditors to stakeholders. Is it surprising that stakeholders would then vote in favor of it?

With a market cap of 800 BTC and an outstanding debt of 277 BTC, more than 1/3 of the value of each PNT token represents debt owed to the creditors now. Would major exchanges continue to list a token that is encumbered in this way? It is naive to think that long standing legal principles about contract law and obligations will not apply here, and that this debt can somehow be swept under a dao vote. Already you can find quite a lot of literature on the intersection between smart contracts and contract law, and enforceability from a regulatory point of view. By choosing to default on the pBTC peg you may think you are protecting PNT value, but eventually you will find out this will have the exact opposite effect.

For as long as these tokens are in circulation, they are claims on the PNETWORK, which remains liable for redeeming them at full value as defined at the time of issuance (meaning 1 pBTC = 1 BTC). As a creditor, I would only consent (and reconsider legal action) to a proposal that commits to restoring the peg. If your efforts were actually directed at more aggressively removing unbacked pBTC from circulation, instead of engaging in unsolicited airdrops, I think you would have already been a long way towards achieving that goal.

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I missed the announcement about the Zoom call since I have been banned from the official Telegram channel.

But I was able to watch the call now, and I have some serious concerns.

First, the repeated assertions without any proof that a few represent more than 50% of the creditor demographic and they are aligned with this proposal. The vast majority of creditors I have been in contact with feel this proposal does not provide proper compensation, that that their views are not represented, and are actively ignored, and overridden. Worse, given the censorship that the team engages in (surprising since without creditors and ptoken holders this project would be actually meaningless), I have seen hardening of positions in some cases, and in others people choosing not to share their grievances any more, and instead exit their positions with massive losses. One particular person exited at a 60% loss.

Second, that Thomas actually admits in the call to thinking about disabling the trading of pBTC. Not content with censoring discussions / speech, it seems like the team behind this project considered limiting proper price discovery for the pBTC token. If this is not sufficient indication of how poorly they themselves value their own proposal, then I do not know what would be.

So much power is vested in the hands of so few, and yet we are assured this is a fully decentralized project. The team does not have the technical ability to dilute PNT to repay the creditors, but is fully capable of limiting pBTC trading to prevent them from hedging their bets.

2 Likes

Thank you all for your additional points. Based on feedback from the community, there seems to be consensus on version 0.6 to be a good compromise with only minor points raised (that will be addressed below) and a general sentiment expressed on moving forward with the DAO voting proposal. For this reason, we expect the DAO voting proposal on version 0.6 of the compensation plan to go live later today.

On the “first come, first served” alternative sniping option proposed (cc: @bavibull ). This could be an option, but we see both PROs and CONs in implementing such a method as opposed to the previously proposed one. For example, the current option creates a rush for pBTC-on-BSC holders who are interested in joining and encourages them to subscribe as soon as possible, while this alternative option would not address this point (hence encouraging a behaviour where people wait until the very last minute to join, that is not ideal). For this reason, we will maintain the current proposal unchanged (in the interest of moving forward), stated that this is an implementation detail and not a major point, so this could still be changed if there is a strong request for using the alternative option instead (this would need to be expressed before the implementation starts).

On automatically merging 10 NFTs into a 10xNFT (compatible with running a light node) (cc: @lapisdei ). While I understand your point, inserting such an automation directly within the NFT smart contract would create extra complexity both from a technical perspective and from a user perspective since this would effectively create two kinds of NFTs (for example, this would create confusion should someone be willing to resell the NFTs). As this is a bit controversial, it would be useful to see additional opinions from the community (again, this is an implementation detail).
In any case, specific rules can be implemented (outside of the NFT smart contract) that would obtain a similar result into simplifying the creation of light nodes via the NFTs. If the goal is simplifying the experience for perspective node operators, I would go with this option.

On pNetwork governance via BSC (cc: @lapisdei ). Voting for PNT-on-BSC holders will be enabled starting today, while DAO staking requires more technical work.

On the USD-countervalue included in each tranche of Step 2 (cc: @lapisdei @marcodalponte ). The USD-countervalue is calculated based on the algorithm defined as $ 5,400,000 / pBTC in circulation. As correctly explained in @marcodalponte’s reply, the actual amount per tranche may be lower or higher based on the number of pBTC-on-BSC tokens that are removed from circulation via Step 1. The amount presented in the compensation plan ( $ 1,950 ) represents the worst case scenario (277 pBTC in circulation).
As the phrasing in version 0.6 refers to “at least $ 1,950” I don’t see a need for changes in the compensation plan proposal.

On the point of “unilaterally redefine the pBTC token” (cc: @jay ). All steps included in the compensation plan proposal (Step 0 + Step 1 + Step 2) do require pBTC-on-BSC holders to take action for accessing the USD-countervalue distributed as part of the compensation plan. Specifically, they are required to claim the USD-countervalue and when doing so they accept the terms of the compensation plan. There is no obligation for pBTC-on-BSC holders to participate in the compensation plan.
As the compensation plan is a compromise that takes into consideration the various parties involved and has been openly discussed with the community, our hope is that the majority of pBTC-on-BSC holders will consider this acceptable.
Your proposal to create a different token to be used for the compensation plan is an option that we have discussed internally as a core team, but it presented various complexities in terms of technical implementation. Since there didn’t seem to be strong support by the community for that specific implementation, we decided to propose the current option that seemed to achieve a similar result while having a simpler configuration.
Finally, the compensation plan proposal has been discussed both with lawyers and exchanges. As for the former, the opinions received doesn’t seem to highlight the warnings that you give for granted. As for the latter, the feedback received up to this point is positive.

On defining the compensation plan in terms of BTC (cc: @jay ). The reason why this is not a feasible solution has been discussed at length and repeated during the community call.

On disabling the trading of pBTC (cc: @jay ). Regardless of their level of decentralization, emergency shutdowns are a very common practice for projects as a protection mechanism against balck swan events. Specifically in cases where lose-lose situations may occur, triggering emergency shutdowns is considered acceptable even in decentralized ecosystems.

On decentralized governance, censorship and pBTC-on-BSC holders representation within the compensation plan (cc: @jay ). pNetwork follows a progressive decentralization roadmap - there are various levels of decentralization within the ecosystem depending on the specific components. For more details, information is available on the blog as deep-dives and on the website.
Defining the current compensation plan proposal was such a long process exactly because every party involved was given the possibility to contribute to it. In fact, the current version of the proposal was vastly community driven. That said, we understand that it’s not possible to obtain a situation where 100% of the parties agree. If someone decided to sell their pBTC-on-BSC that was their decision to exchange this risk profile with someone that, on the other hand, decided to buy the tokens.
Step 0 of the compensation plan has as a goal involving pBTC-on-BSC holders in the decision-making process of the compensation plan. Should, as it was suggested by @jay, the majority of pBTC-on-BSC be against the current compensation plan they will vote against (as PNTs were distributed proportionally to holdings). The voting proposal on the compensation plan that will be opened on BSC has indeed the scope of determining whether there is support for it or not.

The DAO proposal for revision 0.6 is now open. Forum discussion: Proposal: Should the DAO recoup the value lost by pBTC-on-BSC holders affected by the recent hack via the 2-steps process (NFT sale + partial redirection of DAO member rewards) described in the Proposal 1 (rev0.6)?

The voting proposal is open both on Ethereum and BSC. Anyone can cast their votes:

  • via Aragon (Ethereum) Aragon
  • via eidoo.app (Ethereum)
  • via Snapshot (BSC) Snapshot
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The issue with the redefinition of the pBTC token is not with those that choose to take action to access the “USD-countervalue”. It is with those that do not - for the holders that reject your new terms, you explicitly state in your proposal that the token “will no longer be useful”.

In my earliest proposal, I did suggest that you use pBTCv2 as a way to generate revenue and restart the bridge quickly. At the time I did not expect that by moving to pBTCv2 you would default on the original pBTC peg, and since you are going in that direction I regret suggesting it now.

In fact, pBTC holders that did not agree to your terms in Steps 0 will not be able to participate in this vote, since they did not get any PNT airdrop. A truly representative vote of creditor opinion would have used pBTC as the voting token, and not PNT. In fact you are allowing PNT-on-ETH holders in this vote, but pBTC-on-ETH holders, who are some of the biggest creditors, are never even consulted on whether they think this is a fair solution. I suppose you do not wish to alert them to the abuse you are putting creditors on other chains.

As for the legal/exchange aspect, I do not think you are being truthful with the community on this. And my objective in engaging here is not to convince you of my own position, but to give the community fair advanced warnings. A lot of pBTC holders got burned badly because they trusted you and took the claims about the token being pegged and secure at face value. Hopefully PNT holders will not do the same by ignoring the legal risks.

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@jay I will try to answer your points below.

As for Step 0, more than 95% of eligible pBTC-on-BSC funds already claimed their PNTs.

As for the voting on BSC, the voting platform was launched to enable PNT voting on BSC in general (for this and future DAO votes). Specifically on the current voting proposal, once the vote is closed it will be possible to verify which BSC addresses have voted for/against and how many pBTC-on-BSC their respective holdings represent: that’s similar to getting pBTC-on-BSC holders to vote with their pBTC, but it makes such Snapshot Space forward compatible for all PNT-on-BSC holders to use (for future voting proposals on BSC).

As for pTokens being claimed as pegged and secure, these claims were not untruthful, but they are to be considered within the context of the DeFi ecosystem - that is inherently experimental and involves high risks. Battle testing new systems always takes several years, even major blockchains that have been around for years can be affected by complex attacks from time to time.

We are really sorry that pBTC-on-BSC holders were affected by this, but unfortunately abuses of the system can happen even when best practices are followed and security audits done. We are committed to do the right thing and that’s why we have proposed a compensation plan that refunds out of our pocket the full value lost in USD terms. Something that should be kept in mind is that the value has not been “burned” but stolen by a malicious third party (who hopefully will soon be found).

Here some questions and doubts about next steps:

  1. will the official application form be activated on Pnetwork at 5 pm in order to claim the NTF right? I would have to keep connected on the channel and check when the official application form will be THERE activated?
  2. What should be written in the message? 1) Just enough to reply to the topic right? 2) do we need to specify address and how many NTFs do we want to buy? Do we need to spicify which kinf of NFT we want?I can’t find any information about it
  3. how many ntf at most can we buy? one for every 0.01 Pbtc owned right?, or even more in the case ?
  4. (realted do the previous answer) : in order to get the eidoo balck card with 16% cashback for one year, we need 10 NFTs, as well as to be entitled to the light node. Right?
    5)(realted to previous answer)Does this mean that if I can buy 5 nft with my PBTCs, the rest we need 7want to buy to get 10 NTF will have to be bought during phase 2 at the minimum price of 920 USDT ?
  5. is the list of eligible addresses the same as published on 12 October for those entitled to the npts of step 0? Can’t find any other list
    Thank you

Hey @Albo - let me reply to your questions below:

  1. the NFT Pre-sale application will be on this forum. At 5pm UTC we will open a new topic on this forum (it will be called something like “NFT Pre-sale application”) and you will be able to submit your application by replying to that specific forum topic. We will send a notification on the relevant pBTC-onBSC Compensation Plan announcement channel on telegram, but since it’s time-sensitive, if you want to be as fast as possible you would need to be ready on the forum to submit your application.

  2. In the application message you should write: BSC address (the one holding your pBTCs, the one you will be paying from), amount of pBTC you want to participate with (this is important, do specify the amount of pBTC and not the number of NFTs). Note the amount of pBTC needs to be a multiple of 0.01 pBTC.
    Example: 0x7424718f1e6f86a52b477822b155296df764483c - 0.05 pBTC
    The NFTs are unrevealed at this point, so you do not need to specify with kind of NFT you want.

  3. You can buy a maximum of 4.34 pBTC worth of NFTs per address, meaning 434 NFTs. Anti-sniping rules apply.

  4. yes, you need 10 NFTs to access both the cashback programme and the light node. Yes, this means that if you only buy 5 NFTs in the pre-sale, then you would have to buy the remaining 5 during one of the next phases of the sale.

  5. All pBTC-on-BSC holders are eligible to submit an application for the NFT Pre-sale. Anti-sniping rules apply (so, for example, in case of oversubscrition addresses that joined step 0 will have priority over new addresses).

In general, please refer to this communication for more detailed answers to your questions: Implementation of DAO voting proposal #13: pBTC-on-BSC compensation plan

Thank you for complete and clear explanation

Hi Thomas - for the compensation step 2 for pbtc - if it is every other month how long will it take to complete? based off the first payout there is no way it can be accomplished in 10 months.

The documents explain that under normal circumstances (unless the pnt price protection kicks in) 10 monthly distributions will be done. The second one has just been announced and will happen tomorrow, so the first 2 can be considered done already

why i’m not in the the Snapshot 2.2 participants list. I don’t find my address… :frowning:
i hold pBtc since the 24 november and the same day, i accepted by signing the Compensation plan here : http://compensation-plan-agreement.s3-website.eu-central-1.amazonaws.com/

What’s wrong?

We have excluded addresses with a very low pbtc balance from 2.2: we are considering to distribute them a full refund of step 2 in 2.3 next month, as it would simplify things - gas costs would affect significantly their “small” monthly claims otherwise

ok thanks for reply :wink:
in the Snapshot 2.2 participants list, i see a lot of balance under my own balance : 0.00099663
normal?

no, that’s weird, please send me a pm with your address so that we can double check together!

done, do you have received it? tks

Hi,

Going through the snapshot list for claim 2.2, I noticed that some of the adresses entilted to a compensation are former adresses used by the team for compensation :

  • 0x434d7b8f0db80320bf175b071d2931e43156a817 : 2nd round NFT Pre-sale adress entilted to 3971 PNT
  • 0x3e78b88355681344DCaB123B4F9291577D7b1cD3 : claim 2.1 adress entitled to 245 PNT

I imagine it is probably due to late transfert done after the pBTC burn and before the snapshot. But it would be nice to filter them out to keep the distribution to the holder.

Regards

I am a little disappointed… I did not receive any message by pm from bertani to solve my problem. what’s the problem?

Sorry for taking so long to answer, I have just answered to your pm. TLDR is that you were excluded because your pbtc amount is extremely low, you will receive the entire step2 reimbursement in the step 2.3

good catch, thanks for reporting, we’ll fix that in future distributions, while for these tokens they will go back to the dao in 1y time if unclaimed so it should be fine!